PayPal prohibits class actions

A practice that is widespread among U.S. companies is to prohibit class actions clients. Sony , Microsoft , Netflix, Steam already do and as of November 1 will add PayPal, allowing instead resolve any dispute through mediation , or in the courts, but individually.

The clause appears in the terms of service the user accepts (usually unread) to hire a service or product. Users can be exempted from this provision by sending a letter within 30 days after signing the contract, something that people rarely do.

PayPal deals with people’s money and has not been oblivious to the controversies and lawsuits. In 2010, two groups sued the company for violating laws protecting consumers by not providing the money for 180 days, without giving any explanation.

A class action allows many consumers affected by the same problems come together to try to get a repair of the company that caused them harm. If you are banned in theory could be hundreds of complaints that come individually to mediation and then to court – spending time and resources of both the justice of those affected, and the companies themselves. On the other hand, many customers may not have the resources to sue individually, so that companies could get away with it and not take responsibility in such cases.

Of course, eliminating lawsuits is not to be allowed to do everywhere. In the United States, the Supreme Court ruled in 2011 that the Federal Excise Act was above state law that forced companies to allow class actions, stating that companies could add restrictive clauses they seem convenient in terms of service, including removing the right of a consumer to make a class action.

Elsewhere in the world the system is not working well, and class action lawsuits are a right for consumers, and a contract will be considered “abusive” to add such clauses.